New Fed Governor: Moderate Growth Likely

1/9/2012 10:20AM

WSJ's Jon Hilsenrath has exclusive details of a recent interview with new San Francisco Fed Governor John Williams, and his outlook for the U.S. economy. Photo: REUTERS/Courtesy of San Francisco Federal Reserve.

This transcript has been automatically generated and may not be 100% accurate.

on ... the ... it's interesting that gently into cuts and Sanford's as go ... he was Janet Yellen who were self emerges an important voice in now is on the Fed board advising I you know breaking so what ... about San Francisco ... that makes it now start of the right hand man about Fed policy ... um I would call it the right hand man of Fed policy but you know you tend to get ... good economists out there you know you've got Stanford you've got Berkeley Guide UCLA then there's a lot of good ... academic institutions that there's a very little boy areas to get high quality people ... the deal with the other thing about John Williams is that he spent a fair amount of time that the Fed board ... in Washington in the nineteen nineties so he knows all these are ... people here here in DC ... and I he's really grounded in Fed policy spent his whole ... life is a researcher ... examine a lot of questions that the feds have been wrestling with last year's anytime you hear John yelling at first I interview with him since he's taking over in sentences go Fed from Yellen ... but also a time when this research is really come into focus he's been writing in a new note that these ideas paper and it's called ... iTunes or revealing secrets of the temple which is exactly what the Fed's doing right now trying ... to ten thirty and get a bit but thats an according of course the original book the lives of the temple which are reflected the difference in the way to the public perceive the Fed Ben versus today ... that ... was you know I think in a couple of important things that come out of the interview that that I had without would present when one is that ... it's good for him the door is open to more ... pennies in specifically to QE three ... you know ... and I'll what his argument is that he expects inflation to go below the Fed's two percent objective so ... that whole idea has been out of ... focus for the last year because inflation picked up but here's a guy come along saying hey ... no inflation could ... fall again it could slow down get back below what we wanted to be ... reminded to take more action I'd to to get inflation ... up to what we have two are two percent of the contested argument we haven't heard for some time ... and the likely the Italians and use it when I was still down this year for ... it and John D you don't want that to the end of the second quantitative easing of ... that the talk was that the ... to be a high hurdle ... for of for another round ... partly it seemed that not that the Fed was was affected as the surly that was ... you know a lot of on political bickering about it sector ... it is has anything changed especially since the date of the economic data ... has actually been gradually improving ... yet ... a lot is changing out there that the Fed as an institution lot of people that were stung by the reaction to QE two ... I went off really orally know it in in the court of public opinion ... so there's that the was a relaxing reluctance to do it I think what Williams argument ... is interesting because he saying yet you gotta see inflation come down before there's any willingness to do it to do it again ... we can have to be in a position where your they've got ... that that hurdle has to have to be reduced the hurdle is the inflation rate ... they've gotta have more leeway before they don't like it that extra room to help fund the employment front ... yes to the other the other thing is that as you say the economy does look like it's improving ... a lot of people are to be asking why are you even talk about doing more ... when unemployment is finally coming down just leave well enough alone ... II and were to be hearing an argument from from inside the Fed The Williams' argument is unemployment is still ... a lot higher than they wanted to be so if they have room to do more that I considered the euro lot of the next couple days lie speakers will quickly have to go but it's the intended is there any intention your reason one that has become so much more vocal about housing or begin to see some action at the next meeting later this month yet I think that's an interesting question I always hitting later this month but that the Fed is and has been working real hard to get other people to take steps ... to get elected Fannie Mae Freddie Mac regulator ... to ride ... on Clive the types of housing the question is ... if the rest of the government stars doing things that help the housing market is that they can come along and helped by buying more mortgage backed securities itself ... that's an open